BTC Sigma Cloud

Overview

The BTC Sigma Cloud indicator calculates and displays 1, 2, and 3 sigma price movements for Bitcoin (BTC) on a rolling basis, visualized as a cloud. It shows historical volatility bands and projects them forward for the next 7 days.

Settings:
Vol Lookback: Default is 20 periods. Adjust to change the volatility calculation window.

Interpretation:
Cloud Bands: The cloud consists of three shaded layers representing 1σ, 2σ, and 3σ moves above and below the current price.
1σ (Innermost): 68% probability of price staying within this range.
2σ (Middle): 95% probability.
3σ (Outermost): 99.7% probability.

Historical View: The cloud tracks past price movements based on volatility.
Projection: The cloud extends 7 days forward, indicating potential price ranges based on current volatility.
Labels: Subtle labels (1σ, -1σ, 2σ, -2σ, 3σ, -3σ) mark the upper and lower bounds of each sigma level on the latest bar for clarity.

Trading Use:
Use the cloud to gauge potential support/resistance zones.
Monitor price behavior near sigma levels for breakout or reversal signals.
The projected cloud helps anticipate future price ranges for planning trades.

Notes
Best used on daily charts for Bitcoin.
Adjust the lookback period to suit shorter or longer-term analysis.
Combine with other indicators for confirmation.